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Reps. Meeks and McHenry Introduce H.R. 3299 to Encourage Financial Innovation and Protect Consumers Access to Credit

July 20, 2017
Press Release


Reps. Meeks and McHenry Introduce H.R. 3299 to Encourage Financial Innovation and Protect Consumers Access to Credit

Washington, D.C. Senior Members of the House Financial Services Committee, U.S. Congressmen Gregory W. Meeks and Patrick T. McHenry, introduced legislation that would help preserve the innovative partnerships banks have forged with financial technology firms.  Studies have demonstrated how partnerships between banks and fintech firms have helped expand access to financial services in underserved urban and rural communities. The Protecting Consumers’ Access to Credit Act of 2017, reaffirms a 200 year old legal principle, which states that if a loan is legal with respect to its interest rate, it cannot be invalidated if it is subsequently sold to a third party.  This cardinal rule, known as the “Valid When Made Doctrine”, provides the legal certainty and liquidity necessary for banks to collaborate with nonbank lenders and to manage their portfolios in a safe manner.

“I have been encouraged by the innovative partnerships banks and fintech firms have forged to expand access to credit in underserved urban and rural areas.  Since the financial crisis, nearly 5,000 brick and mortar branches shut their doors leaving many consumers without accessibility to affordable financial services,” Congressman Meeks said. “By partnering with fintech innovators, banks – including a number of those certified as Community Development Financial Institutions – have been able to achieve efficiencies in underwriting, allowing them to lower costs and reinvest in communities that stand to benefit the most. Such partnerships should be encouraged by policymakers and I am proud to work with Rep. McHenry to see that they are.”

“By codifying long-standing legal precedent with the valid-when-made doctrine, we ensure that low and middle-income Americans can access our financial markets,” Congressman McHenry stated. “But this bill does more than promote financial inclusion, it also increases stability in our capital markets which have been upended by the Second Circuit’s unprecedented interpretation of our banking laws.”

In addition to reaffirming the "Valid When Made Doctrine," H.R. 3299 provides congressional findings that cite a recent study showing that credit availability decreased for borrowers in New York and Connecticut after the valid “when made doctrine” was invalidated in the Second Circuit Court.  The bill also clarifies that nothing within the law invalidates the authority of the banking regulators, including the Consumer Financial Protection Bureau, to enforce their prudential and consumer protection laws.